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The BMW X3 enters its fifth year of production flush with success after a slew of improvements for 2007, but there's more competition than ever among smaller, more fuel-efficient SUVs.

BMW's response for the 2008 model year is the addition of active head rests, a new Sport Activity Package and an upgrade to the Premium Package of features.

The 2008 BMW X3 comes with a 3.0-liter six-cylinder engine mated to a six-speed manual transmission or a six-speed automatic. The BMW X3 3.0si is the only model.

The X3's drivetrain is equipped with BMW's xDrive all-wheel-drive system, Dynamic Stability Control and Hill Descent Control, revised for 2007 to give it even better grip and control in foul weather.

The X3 is quick and fast, and almost as fun to drive as a BMW sport wagon. The xDrive puts it at the head of the class when weather or road goes north. It's roomy, both for passengers and cargo. And just as important, it's replete with active and passive safety features.

Model Lineup

The 2008 BMW X3 comes in one model: the 3.0si with a 260-hp 3.0-liter inline-6. A six-speed manual transmission is standard, while a six-speed automatic with Steptronic is a no-charge option.

Walkaround

Notable design cues include the front bumper that frames the traditional twin-kidney grille, its chrome vertical slats complemented by a chrome strip along the base of the side windows. The headlight assembly has a clean look, as do the foglights. The optional xenon headlights include the corona light rings. When the Cold Weather package is ordered, the headlight washers retract into the bumper.

From the front, the stance looks much the same as the X5's, with fenders tautly blistered over wide and widely spaced tires, giving the X3 a BMW-like, road-grabbing face. The headlamp lenses and kidney grilles are shaped differently, as is the bumper and lower grille openings, and the bumper is black as opposed to the X5 bumper's body-color treatment.

The X3 looks like the X5 in side view, though the cut line from the front wheel wells to the front doors was eliminated for a cleaner look. A mild character crease bridges the space between the fender blisters, and a relatively low beltline adds openness to the side windows.

From the rear, the new X3 displays a clean, well organized light cluster with horizontal LED taillights.

Standard running gear are 17-inch wheels with all-season tires, while 18- and 19-inch wheels are available.

Interior Features

People familiar with BMW interiors will immediately feel at home in the X3. Controls are located where you'd expect them to be, with the proper heft and texture to the controls. Instruments are easy to read at a glance and communicate the proper and necessary information.

Overall, the interior materials provide a refined driving and riding experience. In a few areas, however, the X3's level of materials and finish quality isn't quite in the same league as its more expensive big brother, the X5.

There's much to like, including the three-spoke steering wheel, the finely grained dashboard material, the materials for the instrument panel and door panels, and the design of the gauge cluster with the instrument hood integrated into the dash.

The display for the navigation system is one of the most thoughtfully positioned of the lot, rotating up out of the top center of the dash, gray instead of black, so it's visible to driver and navigator but nestled unobtrusively halfway down in the recess where it stows when not in use.

Passengers will climb in over aluminum doorsill trim with the BMW logo and will find refined interior trim and materials. Dark ash wood trim is standard; gray poplar or light natural poplar, which we especially like, are no-cost options.

The front seats are supportive and comfortably bolstered. The standard seats are more comfortable than the Sport seats and quite adequately restrain occupants' posteriors when the road begins to wind. Seatbelts feel right, properly tensioned. Ranges of seat adjustment are extensive, to the point a six-footer can enjoy major amounts of headroom and actually put the steering wheel and forward footwell well out of reach; at these extremes, however, rear-seat legroom is seriously diminished.

In terms of roominess, the X3 interior compares favorably with its most likely direct competition, the Lexus RX 330 and INFINITI FX35, giving up or gaining an inch or so here and there. On the downside, the X3's rear seat is quite firm and virtually flat, like a bench, where the others offer more form fit and comfort.

Cargo area, at 71 cubic feet, is impressive, exceeding the X5's by 10 cubic feet with the rear seats folded, and slotting in between the RX 350's 84.7 cubic feet and the FX35's 64.5 cubic feet. With the second row of seats flipped down, Caesar, our 170-pound English mastiff tester, was happy here.

Storage areas are numerous and flexible, many fitted with netting that stretches to accommodate odd shapes and medium-sized water bottles. The mesh nets in the lower front doors, though, have been replaced by dual storage bins for better small-item storage. Rear-door map pockets forfeit several square inches to ash trays.

So much for the tape measure. Where the X3 disappoints is in the intangible and tactile, how the interior looks and feels. There are two front cup holders, but the one mounted on the center console is sized more for soda pop cans than coffee cups or water bottles and looks like an afterthought, something cobbled together and glued in place forward of the armrest/storage bin. The passenger cup holder pops out of the end of the dash by the door, where it gets bumped by knees when the passenger is climbing in or out of the car. Door closings are followed by a hint of a hollow echo, instead of the solid thunk we expect of BMWs.

Driving Impressions

BMW calls its SUVs Sport Activity Vehicles and, indeed, driving the BMW X3 is not like driving other SUVs. While the Lexus RX tends toward the luxury end of the scale, the X3 leans more to turning two-lanes and the occasional twisty dirt track into a fun drive. Our first impression after driving an X3 3.0si around the Bavarian back roads south of Munich was one of smoothness and precision engineering.

The X3 readily swallows mile after mile of high-speed highway. It feels confident in the wet, and really shines on dusty, gravel-strewn back roads and slushy boulevards. With the X3, a driver can actually improve upon their talents and reflexes, thanks to the xDrive all-wheel-drive system working with BMW's multifaceted Dynamic Stability Control. Unerringly, just about the time the driver senses the X3 begin to slide and intuitively readies a saving countersteer, the xDrive calmly tucks the rear end back in line. It's a superb system.

Dynamic Stability Control is even better, working more quickly and efficiently with the braking system. The four-wheel discs now include Brake Drying, which helps them stay dry in the wet, Brake Standby, which poises them for quicker action in emergency situations, Start-off Assistant, which automatically holds the X3 on hills to aid smooth ascents, and Brake Fade Compensation, which adjusts the clamping force in response to the slightest hint of brake fade. In other words, these are the brakes of a vehicle that can be pushed to further limits than the average SUV.

For those who are comfortable driving at the limit, Dynamic Stability Control includes Dynamic Traction Control. A button lets the driver choose a higher threshold of wheel-slip before DSC engages, and though this technique is good for starting off on loose snow, it can also be used to turn the X3 into even more of a driving machine.

The six-speed automatic proved to be smooth and precise in normal, everyday driving. Just put it in Drive and go. When pushing it in the slippery stuff, the automatic frees the driver to focus on braking, accelerating and steering, which can be a lot of fun. When so inclined, the driver can use the Steptronic feature to hold the transmission in a specific gear, manually shifting up or down as the incline or traction dictates or invites.

The six-speed manual transmission, on the other hand, is everything people who know and like BMWs have come to expect and appreciate. Shifts are smooth and precise, clutch engagement predictable and gears properly spaced to keep the engine in the sweet spot of its power band, although it is geared a bit high for relaxed long distance cruising. We prefer the automatic.

Acceleration is silky, linear and quick , thanks to the 3.0-liter inline six-cylinder engine's 260 horsepower. The 3.0si records 0-60 mph times of 6.9 seconds for the manual and 7.1 seconds for the automatic. While not blistering performance figures, considering the vehicle's weight, are no cause for shame.

The optional Servotronic steering is flat-out wonderful. It's speed-sensitive, adding more assist at low speeds, and invisibly altering the steering ratio, so the car turns more with less steering input. Parallel-parking is a breeze, as are quick, mid-block U-turns. As speed increases, assistance diminishes and the ratio slows, making for good on-center feel and sure lane changes. Perhaps the best thing about the Servotronic steering is its transparency; unless a driver moves directly from the X3 to another vehicle without the feature and suddenly has to crank in more steering at slow speeds, it'll likely not be noticed at all.

Braking is smooth and sure, with solid pedal feel allowing linear, gradual stops when desired, unlike many over-assisted systems increasingly popular on high-end cars and SUVs. BMW usually accompanies engine upgrades with improvements to such dynamic elements as braking and handling, and it's just so with the X3 3.0si.

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Final Word

The BMW X3 3.0si is hard to beat for people who want BMW's heritage, looks, powertrain and packaging, but desire the flexibility a sport-utility vehicle offers. The xDrive, Dynamic Stability Control and Hill Descent Control combine to offer excellent handling, grip, traction, stability on gravel roads, muddy two-tracks and snow-covered backroads. Overall fit is to the marque's standards, but the interior finish is disappointing. Leaving the options boxes unchecked yields an affordable and capable SUV that requires no apology, and judicious checking lets even a cost-conscious shopper have the desired luxuries.

NewCarTestDrive.com correspondent Tom Lankard filed the original report from Northern California, with Greg Brown reporting on the 3.0si from the Austrian foothills south of Munich.